Gross lending to February was down on the previous year by 10% at £17.6bn, and consumer confidence has fallen to its lowest level since 1995, according to the Council of Mortgage Lenders (CML).
However, the CML said year on year market data for February from HBOS and Nationwide pointed to the housing market remaining strong, although perhaps levelling, with each recording price rises of 23% and 24.8% respectively.
A spokesman for the CML said: ‘It is far too early to tell whether this housing market data heralds the beginning of the anticipated market slowdown.’
Although people remain positive about their employment prospects, the CML said information, from marketing organisation, GfK, showed headline economic confidence to be at its lowest since 1995, and confidence over personal finances at its lowest since the end of 2000.
The spokesman added: ‘Given the current environment the latest drop-off in confidence is perhaps not wholly unexpected. Indeed confidence began to weaken in December 2002, when the build-up to the conflict began. Therefore it is highly likely confidence is particularly low in response to Gulf-related matters.
‘Although the occasional month of lower consumer confidence is unlikely to impact on the housing market, a sustained dip in confidence is likely to weaken the housing market.
‘The big question is therefore, whether consumer confidence has been falling off primarily in light of the second Gulf War and whether as a result, it will prove temporary. Or whether consumers actually perceive a weakening in the economic fundamentals, which as a consequence will have a more long-lasting impact on housing.’